Analysing reasons for the lukewarm response of the foreign companies looking at the dynamics of FDI, MAJOR GENERAL MRINAL SUMAN suggests the ways to formulate a system of motivational incentives to channelize foreign investments.
India has the dubious distinction of being the largest buyer of conventional weapons in the world as the indigenous defence industry is in a pitiable state. The track record of Defence Research and Development Organisation (DRDO) has been abysmal to say the least. Inefficiency of the public sector is equally proverbial. In addition, every effort is made by the public sector to inhibit the entry of private companies in the defence sector, lest they provide competition to its sloppy functioning. Resultantly, India has failed to develop contemporary defence systems through the indigenous efforts. It is beyond the competence of the indigenous industry to close the gap.
Incontrovertibly, India needs defence technologies desperately. The only course open is to import them and then use them as a spring board for developing newer technologies indigenously. While opening the defence sector to the private industry in May 2001, the government allowed a maximum of 26 per cent Foreign Direct Investment (FDI) component. Detailed guidelines were issued in January 2002. They were considered highly dissuasive, both in intent and content. Foreign investors showed no interest at all.
A proposal to raise FDI limit in the defence sector to 74 percent was mooted in May 2010. The services had no hesitation in recommending 74 or even 100 percent FDI, albeit with adequate policy safeguards in place. However, both MoD and the industry opposed the move. MoD wanted to protect the public sector while the industry viewed the entry of powerful foreign manufactures as a threat to their business interests. The proposal was shelved.
With the change of the government, FDI cap through the automatic route was raised to 49 percent. Higher FDI was also allowed for the state-of-the-art technology with the permission of the Cabinet Committee on Security (CCS). Unfortunately, foreign investors were still not enthused.
This story is from the February 2017 edition of Geopolitics.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber ? Sign In
This story is from the February 2017 edition of Geopolitics.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
Already a subscriber? Sign In
TIME FOR A ROBUST BMD SHIELD
With nuclear-armed Pakistan and China in the neighbourhood, India must prepare ballistic missile defences at the earliest for protecting its densely populated cities
URGENT NEED FOR SMART AND LETHAL WEAPONS
India must tread the path towards the development of a whole gamut of next-generation smart and lethal weapons for countering a two-front threat scenario, writes AMARTYA SINHA
MOBILITY SOLUTIONS FOR THE INDIAN ARMY
While the Indian Army has a significantly large fleet of trucks and utility vehicles, there is a need to further augment the capabilities by adding latest platforms with better fuel-efficiency, faster speeds, larger wheelbases and enhanced axle-load bearing capacities, argues AMARTYA SINHA
C-295 CREATING A MANUFACTURING BLUEPRINT FOR INDIA
With the right momentum, a realistic roadmap and enabling policy framework, a story is being scripted to make India a hub for global aircraft manufacturing. The potential is enormous. An in-depth report.
ENHANCING NAVAL AVIATION CAPABILITIES
A robust Indian naval air arm will prove to be the biggest sea-based conventional deterrence, both for the tactical as well and strategic level battlefields.
HAS THE WORLD FORGOTTEN THE PLIGHT OF THE AFGHAN WOMEN?
With the Taliban and command in Afghanistan, serious questions are being raised about the status of women in that country. GAYATRI SINGH dissects the situation on the ground.
HOW TANKS ARE EVOLVING TO AVOID OBSOLESCENCE
Is the dominance of tanks in modern wars coming to an end? This question is increasingly attracting attention of the military experts as the ongoing war in Ukraine and the second Nagorno-Karabakh War between Armenia and Azerbaijan not long before have witnessed the staggering numbers of tanks being destroyed and outgunned, particularly by military drones.
MISSION GAGANYAAN AFTER LOK SABHA POLLS
The Indian human spaceflight programme will be Prime Minister Narendra Modi’s biggest gift to the Indian scientific community.
TIME TO GO FOR SIXTH-GENERATION AIRCRAFT
With China racing ahead in 6th-Gen Fighter Aircraft Programme, India cannot afford to be left behind. AIR MARSHAL ANIL CHOPRA (RETD) explains
Unending War In Ukraine
Is Russia's War in Ukraine following a script or it is lost in direction? RAVI SRIVASTAVA attempts to answer